SOME AUTOMATED COLLECTION SYSTEM
LARGE-DOLLAR CASES WERE NOT WORKED EFFECTIVELY

Issued on February 5, 2009

Highlights

Highlights of
Report Number: 2009-30-023 to the
Internal Revenue Service Commissioners for the Small Business/Self-Employed and
Wage and Investment Divisions.

IMPACT ON TAXPAYERS

An Automated Collection System (ACS)
large-dollar case is one in which the taxpayer’s aggregate delinquent tax owed
is greater than or equal to $100,000 and less than $1 million.Although workload and inventory were managed
effectively, 17 (27 percent) of 62 sampled cases were either removed from the
inventory or not worked properly by employees.TIGTA estimated that work might have been discontinued on approximately
1,001 taxpayer accounts with a potential dollar impact of up to $209 million.

WHY TIGTA DID THE AUDIT

The audit was
initiated to determine whether large-dollar cases are worked effectively.These cases are important because, while they
represented only about 1 percent of the total ACS modules closed in Fiscal Year
2007, they represented approximately 15 percent of the ACS dollars
collected.The audit was conducted as
part of the annual audit plan.

WHAT
TIGTA FOUND

IRS
management effectively controlled and monitored workload and inventory and
provided additional training to employees.However, 9 (14.5 percent) of 62 sampled cases were systemically moved to
the Queue (an automated holding file for unassigned cases) prior to their
meeting the general criteria for moving cases to the Queue.On these cases, very few or no actions were
taken.Revenue might be lost if cases
are sent to the Queue before they are fully worked by the ACS function.

In
addition, TIGTA determined that employees did not work 8 (15 percent) of the
remaining 53 cases to their proper conclusion, follow all case requirements, or
resolve the cases properly.In some of
these eight cases, the work was performed by non-ACS employees.Revenue can be lost when employees make
decisions on cases without obtaining complete information that could have been
gathered if procedural requirements had been followed and required actions
taken.

WHAT TIGTA RECOMMENDED

TIGTA recommended the Director, Compliance, Wage and
Investment Division, and the Acting Director, Campus Compliance Services, Small
Business/Self-Employed Division, 1) determine how many cases might have been
sent to the Queue prior to meeting the general criteria, sample some of the
cases to determine why the cases were moved, and evaluate the current Business
Rules and resulting programming that automatically move cases to the Queue, 2) remind
employees of the required actions on large-dollar cases through annual training
or briefings and remind managers of the importance of reviewing the cases for
these actions, and 3) determine whether it is practical to involve ACS function
managers in a case review when a non-ACS function employee works a case
assigned to the ACS inventory.

In
their response to the report, IRS officials agreed with two of the three recommendations.They plan to take corrective actions that
include performing an analysis of cases sent from the ACS to the Queue, evaluating
existing Business Rules to ensure that they are working as intended, and
emphasizing to employees the required actions on large-dollar cases.However, IRS management decided it is not
practical or necessary to involve ACS managers in those cases when a non-ACS
function employee works a case assigned to the ACS inventory. In addition, management disagreed with the $209
million estimated dollar impact because dollars might continue to be collected from
cases in the Queue.

TIGTA continues to believe that the IRS should take some
action to prevent/detect errors in cases processed by non-ACS employees even though
the number of cases worked by non-ACS employees was small. In addition, our outcome measurement estimates
were based on the information available at the time of our review, and the IRS
could not provide us with reliable estimates or probabilities on amounts that
might be collected in future years while cases remain in the Queue.

READ THE
FULL REPORT

To view the report,
including the scope, methodology, and full IRS response, go to: